The 'Mind the Gap' reports assesses the biodiversity and climate disclosures of 120 of the world's largest listed companies across the CAC 40, FTSE 100 and S&P 500.
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Over the past two decades, capital markets have become increasingly able to assess climate-related risks because companies have steadily improved the quality of greenhouse gas measurement and disclosure. Biodiversity has not followed the same trajectory.
In Mind the Gap, the Biodiversity Footprint Company assessed the biodiversity and climate disclosures of 120 of the world's largest listed companies across the CAC 40, FTSE 100 and S&P 500. The contrast is striking: companies disclose around two-thirds of the climate information we assessed, but only around one-tenth of the biodiversity information.
Investors need to understand biodiversity performance
More importantly, the greatest disclosure gaps relate to information that investors need to understand biodiversity performance, including ecosystem condition, material species, changes over time, biodiversity accounting and audit trails.
For asset managers, insurers and pension funds, this has important implications. As nature-related risks become increasingly material to investment decisions, stewardship and portfolio management, the completeness of biodiversity disclosures matters as much as their existence. Investors need information that allows them to understand not only where biodiversity impacts occur, but also how those impacts are assessed, tracked and reported over time.
Biodiversity disclosures is more than isolated metrics
One of the key messages from Mind the Gapis that investors should think about biodiversity disclosures as a progression of increasingly important questions, rather than a collection of isolated metrics.
Drawing on the principles of the Biological Diversity Protocol (BD Protocol)—an internationally recognised framework for biodiversity accounting—our assessment follows a logical progression from identifying biodiversity impacts, to measuring ecosystem and species condition, to demonstrating change over time through transparent accounting and audit trails.
Importantly, the frameworks needed to support this progression already exist; the challenge is that the information they are designed to generate is still infrequently disclosed.
The next stage of nature finance will not be defined by more disclosures alone, but by better measurement. Just as standardised carbon accounting transformed climate investing, biodiversity will require transparent accounting frameworks, consistent ecosystem and species metrics, and auditable evidence of change over time before markets can confidently distinguish leaders.
For more information on the report contact The Biodiversity Footprint Company.
See also: Nature Risk is a Data Quality Problem
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